What is Your Character and is it Helping or Hurting You as a Leader?

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Every day, it seems, we’re bombarded with news of leaders, corporate heads, politicians and other key figures in our society whose behavior shocks and deeply disappoints us. Whether it’s egregious lying, or a lack of accountability, or rampant narcissism or indifference to others, we’re reminded daily of how important character is in our lives and in the successes (or failures) we create and achieve.

In my own corporate life and later when I served as a marriage and family therapist, I was astounded by what seemed to be serious character flaws in some people that led them to hurt others, impede positive outcomes and destroy trust and loyalty through their reckless behavior.

Interested in how character is developed and assessed, I was intrigued to learn of a new book that helps us understand, measure and build character. Return on Character, by Dr. Fred Kiel and published by Harvard Business Review Press, is the result of the first major study to show a measurable relationship between CEO character and business success. Dr. Kiel is a psychologist, co-author of Moral Intelligence, and international co-founder of KRW International, a consulting firm whose mission is to “raise society’s standards for great leadership where skills plus character drive results.”

The book draws on KRW International’s seven-year study of nearly 9,000 employees and the 84 CEOs and executive teams they work for at Fortune 500 and 100 companies, privately held firms and nonprofits. The study reveals that character-driven leaders and their teams consistently deliver as much as five times greater returns for their organizationsthan those run by “self-focused” leaders. This bottom-line impact shows that character is something to be taken seriously by every leader, organization, board and investor.

In the book, Kiel explores how new research from psychology, genetics and neuroscience has shattered our assumptions about what character is and how moral intuition gets formed from our life experiences and habits. While we used to think character was an unchangeable personality trait, new research shows that changing character habits can evolve someone from the worst end of the spectrum—“self focused leaders”—to the best: “virtuoso leaders.” Whatever level we’re at currently, we now have the power to develop the character habits of true leadership.

Dr. Kiel shared with me his groundbreaking information about character, its formation and how people at any level can begin acquiring the character habits that can harness the power of doing good to make their organization great.

Kathy Caprino:Dr. Kiel, can you explain what character is and how it is formed?

Fred Kiel:Character is an individual’s unique combination of internalized beliefs and habits that motivate and shape how that individual relates to others. Our study focuses on the four character habits that are universally valued across all human societies, and those are integrity, responsibility, compassion and forgiveness. In many ways these character traits are innate, but they are also developed and refined through our individual life journeys. The good news is that anyone can become a high-character leader regardless of their background if they follow a path of self-awareness and are willing to develop the necessary habits.

Caprino:How can we measure character exactly?

Kiel: By leveraging the big data tools available today, nearly anything can be quantified. We analyzed almost a million individual data points to derive the Character Curve, and it’s amazingly accurate. One of the really interesting aspects of our study is that we measured where leaders thought they themselves would fall on the Character Curve (a self-rating, if you will) and then contrasted that self-rating with where they actually fell on the Character Curve according to their employees. The highest character leaders rated themselves below where their employees rated them, revealing a bit of the humility in their character. But the lowest character leaders all rated themselves much higher than their employees rated them. When it comes right down to it, all of us believe that we’re good people committed to doing the right thing and that’s why measuring character is so important: it reveals our blind spots and gives us the opportunity to improve.

Caprino:What is the tie between a leader’s character, and the success of his/her business?

Kiel:I always suspected that higher character leaders would produce better financial results than lower character leaders, but I have to admit I was shocked when I saw how much better they were. The leaders on the lower end of the Character Curve returned just 1.93% on assets while the Virtuoso leaders on the higher end returned an average of 9.35% — nearly five times the ROA of the self-focused leaders.These results are tied to a number of character traits, not the least of which is the habit of a Virtuoso leader to focus on positive results for all stakeholders (investors, customers, employees), whereas self-focused leaders are more concerned with enriching themselves, often to the detriment of everyone else.

Caprino: What are some achievable ways we can change character habits and build a stronger character and why we need to?

Kiel:Let’s start with the why first. All of us want better relationships with the people around us, be they employees, colleagues, friends, or family members. In order to have good relationships there must be trust, so it’s important that the people around you trust you. The components of trust are the four keystone character habits of integrity, responsibility, forgiveness and compassion.

Over time the people around you subconsciously measure you by these. Do you consistently tell the truth? Do you own up to your mistakes? Are you understanding of the difficulties of others? Are you quick to forgive those who make well-intentioned mistakes? Humans are social creatures, and naturally gravitate toward those who are trustworthy. In a business context this means a trustworthy leader is going to attract the best talent, have a lower corporate risk profile, and provide a better return for all stakeholders.

How one treats others is a matter of habit. Neuroscientists tell us that 95% or so of the decisions a person makes in a given day – from what to have for lunch to important business decisions – are made intuitively or automatically. We don’t think about it, we just do it. So that’s the good news. Since the way we interact with others 95% of the time is habitual, we can change those habits. Most of us have small character habits we’re not even aware of that sabotage the way others perceive us, and once we’re made aware of those habits they’re easy to fix.

As for the steps to take to improve your character habits, we don’t even need five. Here are three that’ll have an immediate impact:

Pop the Bubble

Take the free Character Quiz and Reputation Predictor on our website. The Character Quiz will tell you where you think you fall on the Character Curve. The Reputation Predictor will tell you where others think you fall on the Character Curve. It’s not uncommon to see a big difference in the two data sets, so don’t panic if one is considerably higher than the other. Consider this your invitation to change.

Find the Fuel

Courtesy of Fred Kiel

Figure out which habit to address first. Use the above graphic to assist you. Ask a trusted friend or advisor to help identify the gaps in your character. Give them permission to be brutally honest with you. Decide which character habit change will make the greatest impact and provide the greatest benefit to you and others. Maybe you’re not always truthful. Maybe you hold others to higher standards than you hold yourself. Maybe you treat others harshly when they disappoint you. Maybe you don’t own up to your mistakes. Whatever it happens to be, this is the Achilles heel of your character. Identify this blind spot and resolve to do whatever it takes to change it. This is your Keystone Change. Describe to yourself what the “new you” will be like after you’ve successfully implemented this Keystone Change. Write down the necessary steps to achieve this change.

Go Public

Share the plan with a trusted friend or advisor and ask them to hold you accountable. Accountability is critical to long term change. When you determine your Keystone Change, tell everyone what you want to accomplish and ask them to give you feedback. It might not always be pleasant to hear, but it will keep you on track and ensure better results.

Now here’s a bonus tip: If you only take one thing away from this, it should be forgiveness. If you focus on your forgiveness skills, you will likely do better all around. It’s interesting, because our research revealed that forgiveness on its own doesn’t make a really profound impact on the overall results. But take forgiveness out of the equation and almost everything collapses. This indicates to us that forgiveness serves as the mortar which holds the character structure together. Therefore, if you focus on improving your forgiveness you are subconsciously improving the other three character habits.

Kathy Caprino

Kathy Caprino currently runs a leadership and career success coaching and consulting firm focused on the advancement of women. A trained therapist and coach, Kathy has had the pleasure of working with over 10,000 emerging women leaders at Fortune 100 companies, national women's conferences, non-profits, academia and startups. Kathy has also served as a graduate instructor for New York University and career trainer for Mediabistro. She blogs for Forbes, Huffington Post, AARP's Life Reimagined and her own Ellia Communications career blog. Kathy is the author of Breakdown, Breakthrough: The Professional Woman's Guide to Claiming a Life of Passion, Power and Purpose. You can reach Kathy at www.elliacommunications.com, Amazing Career Project, and connect on Twitter @kathycaprino, Facebook, LinkedIn, and on Google+.